This must be the only
James Packer
story The Australian Financial Review hasn’t reported in the past 12 months. But it’s a funny one. He’s layin’ down some phat beats.

Is James the “Real Slim Shady"?

J-Pac?

Just think about the hip hop parties he’ll be able to host on his boat.

The Australian billionaire is part of a group of investors tipping $US60 million into a new music subscription service being developed by Beats Electronics, it was reported last night. Yes, it’s the company co-founded by hip hop star Dr Dre and music producer Jimmy Iovine that makes those groovy, colourful headphones popular with the youth of today. And also a certain fund manager. Do tell!

Beats intends to spin out the subscription service, which has the working title “Daisy", as a separate company. Daisy recently brought on board Trent Reznor – the Academy Award-winning composer for his work on The Social Network soundtrack, and Nine Inch Nails frontman – as chief creative officer.

The big question is, which fund manager did I see sporting Beats By Dr Dre headphones while catching the train home?

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I told a friend of mine who happens to have had money in said fund manager’s fund for a number of years.

“A train? What was he doing on a train? And Beats? Beats? What was he listening to? That matters, you know. I don’t want my money invested with a guy who listens to bad music."

Was it the heavy West Coast G-funk style of rap for which Dre is famous? That’s something for me to chase up.

But who’s the fundie with such incredible mojo? I can’t say, can I? Well, it’s a “he", and he’s actually head of the Australian equities division at a major funds management company.

There was a clue in the copy.

Safe havens – do we need them? Looking at the most recent numbers on gold exchange-traded funds, the answer appears to be “no".

Or less “yes".

Investors dumped 106 tonnes of gold bullion via ETFs in February, the biggest monthly outflow on record, according to Bloomberg data. That takes the net outflow for the first two months of the year to 140 tonnes, says the Financial Times.

The continuation of the global sharemarket rally this year, now most notably with the Dow Jones reaching a record high this week, has reduced investors’ appetite for perceived safe havens, such as gold.

The price of gold is sitting around $US1574 an ounce, down about 18 per cent from its record level of $US1920 in 2011. That’s almost a bear market.

What’s interesting about gold is that investors were supposed to be buying it for two reasons: perceived safe haven and inflation hedge.

While inflation at the moment, seems under control globally, I think you might agree the outlook for inflation has probably increased in the past six months.

Why? Because we’ve had the US Federal Reserve, European Central Bank, the Bank of England and the Bank of Japan variously committing to either more or open-ended asset purchases in a bid to stoke growth in their economies. Furthermore, in the UK, they’re even thinking of ditching inflation targeting, while in Japan, they’re going to tolerate higher inflation.

Maybe that suggests it’s the safe haven money being pulled from the gold ETFs if, say, gold has any appeal as an inflation hedge.

That may have bigger implications for other safe havens. Even the Australian dollar, which had been seen as a safe-haven currency (because of the government’s AAA-rated bonds), may be at risk. The currency remained strong when the economic outlook was pretty cloudy, but it hasn’t really shot higher now things are looking okay. There’s a decoupling/recoupling thing going on there that we should definitely be watching out for in coming weeks and months.